PLANNING FOR THE FUTURE OF YOUR ART COLLECTION.
When it comes to planning your estate, what should you do with your art collection? This is an important and often emotional decision that requires a lot of thought, planning, and communication.
When it comes to planning for your art collection’s future, there are a few options and some key considerations:
1. Leave your collection to heirs
Questions to ask:
• Do your heirs want your collection? If so, can there be equal distribution of your assets to avoid conflict among your heirs? And is it best to gift art works to your heirs in advance or to establish an Alter Ego Trust?
• Do they understand the level and cost of maintenance associated with keeping the collection?
Key considerations:
• Ensure your heirs have the resources to be able to properly maintain the collection.
• If your heirs want to sell pieces in the collection, it is important to understand the costs associated with selling and capital gains tax.
2. Sell Your Art
Questions to ask:
• What is the art worth? How have other pieces by this artist been selling in the secondary marketplace?
• Who do you want to work with to assist you in selling your collection?
• What are the costs associated with selling artworks?
Key considerations:
• Auction houses, galleries, and private art dealers are options depending on the works in your collection. Privacy may be important to you when selling your works.
• Examples of typical fees could include commissions, taxes and shipping. Capital gains tax is also an important factor when selling your artworks.
3. Donate artworks
Questions to ask:
• What institution do you want to donate your artwork to and do they want your artworks? Does that institution qualify for a Cultural Property donation?
• Is the artwork certified as cultural property?
Key considerations:
• Donating art is a two-way decision. The museum or institution will have to decide whether or not they want your gift.
• You will likely need to sign over ownership in order to qualify for a tax credit. Eligible institutions in Canada will require a signed Deed of Gift to apply for a Cultural Property donation that leads to a full tax donation without capital gains implications.
• Artworks may need to be approved by a cultural board to be of national significance for tax purposes.
Regardless of the decision you choose to make, it is important to ensure your collection is properly organized and valued. Artworks should be cataloged, photographed, appraised and insured so a seamless transition can be made.
Talk to your financial advisor and lawyer for best practices when determining how to best handle the transition of your art collection in your estate.
or call us directly at 416-450-5360